Strategies and Advantages of Software Livre In An Economic crisis

1. Strategies and Advantages
of Software Livre In An
Economic Crisis
by
Jon quot;maddogquot; Hall
Executive Director
Linux International
Copyright 2008

2. Who Am I....
....and Why Should You
Listen?
● Thirty-nine+ years in the computer industry
– Mainframes 5 years
– Unix since 1977
– Linux since 1994
● Programmer, Systems Engineer, Product
Manager, QA, Technical Marketing, Educator,
Consultant
● Large systems to very small ones
● Vendor and a customer
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3. The World Is In Economic
Crisis!
● Financial Institutions failing
● Large Manufacturing and Retail
companies failing
– “Big Three” auto
– Sharper Image
● Companies laying off people
Obama keeps talking about SMBs and “spreading the wealth”
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4. Small and Medium
Business
● In USA:
– Small business – less than 100 employees
– Medium business – less than 500
employees
● Globally, 40-50% of all GDP is SMB
● Major advantages:
– employment potential and low capital cost
– innovation
– higher growth rate
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5. More USA Statistics on
SMB
● 99.7 per cent of all employer firms
● 50% of all private sector employees
● Almost 45% of private sector payroll
● 60-80 per cent of all new jobs
● 40 per cent of high tech employees
● 52% are home-based
● 97.3% of all known exporters
● 28.9% of all goods exported
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6. Survival Rate of SMBs
● 66% more than two years
● 44% more than four years
● 31% more than seven years
SMBs employ people, make products, create services!
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7. Are Large Companies the
Only Ones Sustainable?
Sure! Just ask....
● Apollo
● Wang
● Data General
● Digital Equipment Corporation
● Compaq Computer Corporation
● Enron
● General Motors
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8. Large Business
● Monopoly potential
– Hard to have competition
– When they fail, they fail badly
● “Big Three” car makers
● Wall Street
– Government often “held ransom”
– Consumers often “held ransom”
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9. Computing In The
Beginning
● Hardware expensive, computers few
– Software hand-tailored, from beginning
– Not “computer science....computer black
magic”
– “Punched cards and FORTRAN all you
need”
● 1980s – Hardware was becoming less
expensive
– Software was manufactured
● 2007+ Hardware is incredibly cheap
Copyright 2008
– Software should be tailored again

10. The Economics of Mass
Production
● Meets 70-90% needs of 70-80% of
market
– .70 x .70 = .49, less than half!
● Create commodity products
– What is a commodity?
● Corn?
● Cars?
● Money?
– Are business situations a commodity?
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11. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
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12. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

13. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

14. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

15. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
Copyright 2008

16. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
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17. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
● Source Code allows you to sand the
corners of the square peg
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18. Imagine Trying to Fill a
Round Hole
● Proprietary software is a square peg
● No matter how many square pegs you
use, you can never really fill the hole
● Source Code allows you to sand the
corners of the square peg
Copyright 2008

19. Sometimes I Speak To
Hundreds
Of Businesspeople....
● Who has ever had a problem with
closed source programs?
● Who has turned in a problem report?
● Who has gotten a good answer back?
● Who has had to change their business?
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20. Wall Street Loves
Production Software
● High Profits, low investment
● Few jobs, non-local
● Production software is like printing
money
– Who calls the treasury for assistance?
– Who calls a farmer?
It is in “their” best interest.
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21. 80% of All Software
Written...
...is NOT prepackaged, production
software
● Systems Admin software
● Embedded Systems Software
● Manufacturing Software
● Other
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22. Software In 1977-1980
● Economies of scale made “shrink wrap”
software possible
● Companies Started up
– 100 engineers
– 1000 customers
– 2000 reports
– 20/engineer
No problem!
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23. It Is Now (Almost) 2009
150 engineers, 4.5 million customers
● 9 million pieces of paper
● 60000/engineer
See the problem?
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24. Closed Source
Functionality Gap
“What You Need vs What You Get”
● Unstable software
● Late bug fixes
● Not in your language
● Does not support your hardware
● Does not do what you want
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25. 1977 vs 2009
1977 2009
● Expensive ● Cheap Hardware,
Hardware, Software Software
● Few computers ● Computers
“Everywhere”
● Large training
● Less training
● English Language
mostly ● Many languages
needed
● Small volume of gap
● Large volume of gap
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26. Volume of Gap
● 1977 - 5 USD of loss per day per
computerized knowledge worker
● 2009 – 5 USD of loss per day per
computerized knowledge worker
● Same rate, larger loss
This is bad today with only 1,000,000,000 computers
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27. Total Cost of Ownership
(TCO) vs Value
Don't be fooled!
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28. Most People Do Not Want
Products
● Cars and Food
● People want service
● Making software do what people want
The “help is far away” problem
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29. Not the Functionality I
Want...
....what the company thinks I want...
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30. How Did We Get Here?
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31. I Was A Product Manager
At Digital Equipment
Corporation
● 550 engineers
● 650 product requirements
● 50 of the top ones, 1-2 more further
down
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32. Financing
● The average person in China makes
about 3 USD a day
– different financing for different economies
● Governments with long-term
vision/funding are few, getting fewer
● Investment cycles getting shorter
● Increasing value of Internet to business
one way of financing for everyone
● Micro-financing – business for everyone
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33. To Start A Business Today
● $$ in computer equipment
● $$$$$$$ in computer software
– to say nothing of contract negotiations
● $$$$ in telephony equipment (PBX?)
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34. Proprietary Software vs
Software Livre
● Buy software and ● Pull software from
pull software from Internet (no
box royalty)
● Install software ● Install software
and try to get it to and try to get it to
work work
● Call support line ● Find source code
and stay on hold on Internet, fix it
yourself
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35. Software Livre!
● Helps with Balance of Payments
– Local jobs help local economy
● Allows you to start business with less
up-front investment
● Allows you to change parts of software
to meet your needs
– bug fixes
– particular enhancements
● Focuses your investment
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36. Sustainability
● If it is not here tomorrow, it did not
really get here today.
● Long term business plan, not “get rich
quick”
● Re-evaluate ways of doing business
● Make sure everyone makes money
● Products as a managed service
– Remove complexity
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37. Jobs
● Programmer
● Systems Analyst
● Systems Administrator
● Product Manager
● Technical Marketing Manager
● Teaching
– Commercial
– Public
● Consultant
●
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Integrator

38. Service
● Highly trained and skilled service
– Like a brain surgeon
– Like a lawyer
● Not just packaged product installers
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39. May Not Have Electricity:
Or A Different Value System
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40. Open Certification...
....Linux Professional
Institute
● Certifies Linux Systems Administrators
● Worldwide
● Distribution Neutral
● Vendor Neutral
● Does not compete in training area
● Non-profit
● Advisory board
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41. Free Software Is A
Business Enabler
● Your own language
● Your own culture
● No lawyers needed
● Local advertising
● Paid Free Software people
– Systems administrators
– Internal programmers
– government programmers
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42. Co-Operatives
“Single person...what can you do?”
● Bring together multiple people
– Different expertise
– Shared resources
● Legal
● Administrative
● Sales
● Legal entity
– Longevity
– Professional Insurance
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43. Thanks
● Koolu, Inc - www.koolu.com (Who pays
my salary)
● IBM – who helps with sustaining funds
● Linux New Media -
www.linuxpromagazine.com/pawprints
● The Free and Open Source Software
Community
● You
Copyright 2008

44. Questions?
Copyright 2008